Puerto Rico Warns of $2 Billion Deficit If Forced to Pay Debtsby
Commonwealth may run out of cash by February, report says
Island has used debt-moratorium law to avoid paying on bonds
Puerto Rico said it may run out of cash by February if it’s forced to cover bond payments, underscoring the pressure that’s causing the island to default on a growing share of its $70 billion debt.
The commonwealth projects that it will have a deficit of at least $2 billion in the year ending June 30 unless a debt-moratorium law is kept in place, according to a Dec. 18 report from the Government Development Bank. The law is scheduled to lapse on Jan. 31, after Governor-elect Ricardo Rossello is sworn in, though the governor can extend it by another two months.
Puerto Rico skipped about $1.5 billion of bond payments through September as Governor Alejandro Garcia Padilla conserved cash to keep the government running. The commonwealth is facing another round of large debt payments in February.
A federal board created to steady the island’s finances is working on approving a fiscal plan before those payments are due. Rossello will have to work with the seven-member board to find a way to restructure the government’s debt.